AT&T to ax 2G by 2017, reuse spectrum

AT&T plans to shut down its 2G service by the beginning of 2017 as it works to address a spectrum shortage limiting capacity on its networks.

It will reuse the spectrum from its 2G networks to support its HSPA and LTE networks "as part of our ongoing efforts to improve our network performance and help address the need for additional spectrum capacity," the company said in a quarterly report filed with the SEC on Friday.

“Our capacity constraints could affect the quality of existing voice and data services and our ability to launch new, advanced wireless broadband services unless we are able to obtain more spectrum,” AT&T said, calling its spectrum and capacity constraints “significant.”

The 2G services are slated to be taken off-air by Jan. 1, 2017.

Just 12 percent of its 69.6 million postpaid customers used 2G phones at the end of the second quarter, while more than one-third used a device running on its HSPA+ or LTE networks, AT&T said. It is working "proactively" with the 8.35 million postpaid customers affected by the pending 2G network shutdown.

The transition is not expected to have a "material impact" on its finances, AT&T said.

News of the pending 2G shutdown comes on the heels of AT&T's acquisition last week of NextWave Wireless, a deal that will give it additional spectrum for its LTE network. The transaction, valued at $600 million, provides AT&T with WCS and AWS spectrum.

AT&T has also acquired a number of 700 MHz licenses over the past months, spectrum that it will also be able to use for its LTE service. On Friday, it filed applications to purchase 17 licenses for 700 MHz lower B- and C-block spectrum from David Miller, ComSouth Tellular, Farmers Telephone Co. and McBride Spectrum Partners.

The operator has been on the hunt for new airwaves since its bid to acquire T-Mobile USA fell through. The failed transaction was touted as a way for AT&T to address its need for additional capacity.

AT&T competitor Verizon Wireless is working to get government clearance for a $3.9 billion purchase of AWS spectrum from four cable operators, a deal announced around the time the T-Mobile merger was falling apart. Verizon plans to use the spectrum for LTE.